Foreign Cars vs. American Cars: Which Are Better?
American cars may have lower repair costs, while foreign cars have a reputation for fuel efficiency. But there’s not much difference in the cost of insuring foreign versus domestic cars.
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When you’re shopping for a car, you may be less focused on its country of origin and more interested in its features, quality, and reputation. But it’s helpful to know about some of the key differences between cars made at home and abroad.
Domestic brands can be less expensive to buy and repair. Foreign makes may be more reliable and fuel-efficient. Car insurance companies apply the same rating factors to both types of vehicles when calculating your insurance premium.
Ultimately, the best car for you depends on your needs. Here’s a look at important factors to weigh before deciding which type of car to buy.
Foreign cars vs. American cars: What’s the difference?
The automobile industry has gone global, altering the definition of “Made in America” over the years. American vehicles may include foreign parts, while many Asian and European cars are at least partly assembled in North America.
But generally, the manufacturer’s headquarters, where the majority of its parts come from and where the final assembly takes place, define a car’s origin.
Cars from the same region or country share certain characteristics. Domestic brands often produce a wide selection of high-quality cars, focusing on larger vehicles like pickup trucks and SUVs, while foreign carmakers often produce compact or luxury designs.1
Cars from foreign manufacturers make popular choices among American consumers. The Ford F-Series trucks are the best-selling vehicle in America, but foreign brands like Toyota and Honda dominate the rest of the list.
Here are some of the major differences between foreign and American brands.
Performance
Many top performance cars — vehicles with powerful engines, sporty speed, agility, and a superior driving experience — are foreign-made brands. These vehicles typically incorporate luxury features with performance capabilities.
Top performance/luxury brands include Bentley, BMW, Jaguar, Mercedes-Benz, and Porsche, according to Edmunds.1
Reliability
Reliable cars require less maintenance and fewer repairs, and they tend to last longer — thereby saving you money over time. American automakers offer plenty of dependable options, taking four spots in a study that named the longest-lasting cars on the market.2
Good to Know
Overall, foreign brands are more reliable compared to American-made vehicles. In fact, iconic American brands Ford and Chrysler issued the most vehicle recalls in 2023.3
Safety
All new cars come with safety features and options, but foreign vehicles earn more accolades in this category. For 2023, about 92% of the top safety picks from the Insurance Institute for Highway Safety (IIHS) were from foreign automakers.
German cars, like Mercedes-Benz models, topped the list, along with Japanese manufacturers like Honda and Toyota.
Fuel efficiency
Fuel efficiency can help you save money on gasoline costs, and it’s better for the environment. Foreign-made cars are typically more fuel-efficient than American vehicles.
The EPA’s Green Vehicle Guide lists models from Toyota, Kia, Lexus, Hyundai, and Volvo as the most fuel-efficient.
Technology
Many newer cars come with advanced features like blind-spot monitoring, backup cameras, lane assist, and more. But some carmakers are better than others at bringing new technologies to market, and foreign brands earn higher ratings in this category.
The J.D. Power 2022 U.S. Tech Experience Index (TXI) Study reviewed 32 car brands, and only one American automaker (Cadillac) earned an above-average score.
Purchase price
Domestic vehicles cost more on average compared to brands from overseas. In lists of the most affordable cars on the market, Japanese and Korean manufacturers like Hyundai, Mitsubishi, Kia and Nissan take the top spots.4
Resale value
A car that retains its value can help you recoup more of your investment when you’re ready to sell. According to a list of best resale value cars by Kelley Blue Book (KBB), both foreign and American car brands are equally represented. Five of the cars originate from a foreign country, while the other five hail from the U.S.
Insurance costs
Car insurance companies price policies based on several factors, including your vehicle’s model year, safety features, theft potential, and more.
Insurify data shows that American and foreign manufacturers are equally represented on the list of the 10 cheapest cars to insure. Brands like Subaru, Buick, Honda, Ford, and Chevrolet can all help you save money on your insurance rates.
The costs shown here are the national average monthly costs based on Insurify data.
Disclaimer: Table data sourced from real-time quotes from Insurify's 500+ partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.
Car brands made (mostly) in America
The American Automobile Labeling Act — or AALA — is a federal law that requires carmakers to disclose the percentage of parts that are American-made when a passenger vehicle is sold. American companies print this information on a sticker and place it on the new car’s window.
AALA information illustrates how the distinction between foreign and domestic brands blurs when you consider the percentage of U.S.-made parts a vehicle incorporates and the country where it was finally assembled.
For Example
Honda and Toyota — historically considered foreign carmakers — have multiple models assembled in the U.S. with mostly American-made parts. Even well-known foreign brand Mercedes-Benz has multiple models that are assembled in America with up to 10% American-made parts.
The following table shows makes and models made mostly (60% or higher) in the U.S., according to AALA data.
Pros and cons of foreign vs. domestic cars
Ultimately, personal preference and affordability should drive your choice of a vehicle. But it’s worth noting that both domestic and foreign vehicles have advantages and disadvantages to consider.
Pros and cons of foreign vehicles
Pros
Greater fuel efficiency
Higher reliability ratings
Generally retain their value
Cons
Higher purchase costs
Higher repair costs due to foreign parts
Often require more expensive premium gas
Pros and cons of American-made vehicles
Pros
Generally lower purchase costs
Specialize in larger vehicles, like SUVs and trucks
Lower repair costs for domestic parts
Cons
Less fuel-efficient
Less reliable
Higher depreciation
Foreign cars vs. American cars FAQs
Whether you choose a foreign-made or domestic vehicle, it’s important to properly maintain and insure your car. Here’s some more information to help you weigh the advantages and disadvantages of foreign versus American cars.
Do foreign cars last longer than American cars?
How long a vehicle lasts likely has more to do with how well you take care of the car than the car’s brand. But in general, Americans are driving their vehicles longer, regardless of the make and model.
The average age of vehicles on the road is currently 12.5 years, according to the S&P Global Mobility report.5
What is considered a foreign car?
A foreign car is one that’s produced by an overseas company and made of mostly foreign-made parts. They’re more likely to be assembled overseas as well — although many makes and models traditionally thought of as foreign are now assembled in North America.
What are the benefits of foreign cars?
A foreign model car typically receives better ratings in safety and reliability and often retains its value better than American-made vehicles.
When did American cars get their bad reputation?
American car companies generally had a reputation for producing low-quality vehicles in the 1970s and ‘80s. Car enthusiasts call this the “Malaise Era.”
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